Modesto reaches deal with cannery over sewer fees lawsuits

Modesto has reached a deal to end the legal action filed against it by Stanislaus Food Products Co., in which the tomato cannery claimed the city has overcharged it by more than $10 million in wastewater fees since 1999.

The city will not pay the cannery money. Instead, it has agreed to study its wastewater rates and incorporate the results into the rates.

Stanislaus Food has agreed to drop the lawsuits it filed against the city in 2011 and 2013 in Stanislaus Superior Court and will not refile them as long as the city completes the rate study by Nov. 1, 2015, and incorporates the study’s findings by May 1, 2016, according to a city news release.

Stanislaus Food uses millions of gallons of water each day during its summer canning season to rinse its tomatoes. Since 1999, this wastewater has not been treated but diverted to the city’s cannery segregation line, where it is piped to the city’s 2,526-acre ranch on Jennings Road. The rinse water is used as irrigation water at the ranch.

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The company has claimed that the city’s wastewater charges for the rinse water include costs associated with the city’s two wastewater treatment plants, even though the rinse water is not treated at the plants. Stanislaus Food claims that violates state law.

Stanislaus Food officials and the company’s attorney did not return phone calls Thursday afternoon seeking comment. Stanislaus Food has operated in Modesto for more than 70 years and produces canned tomatoes and sauces for Italian restaurants and pizzerias. It employs about 160 people year round and about 1,400 during the peak of canning season.

Utilities Director Larry Parlin said the city essentially has one rate for all of its wastewater customers and that rate includes costs associated with all of the city’s wastewater operations. He said it’s not unusual to have one rate.

Modesto believes its wastewater rates are legally valid, according to the settlement agreement.

“The city doesn’t concede that Stanislaus Food has been overcharged in the past, but it is agreeing that it will look at a possible, future unblended rate structure, City Attorney Adam Lindgren said.

Lindgren said Modesto has spent more than $200,000 for outside legal services in this matter, with most of that for the work of attorney Rick Jarvis of the law firm Jarvis, Fay, Doporto & Gibson.

City Council members approved the settlement during the closed session portion of their Tuesday meeting. Lindgren said the council’s approval was not reported to the public then because Stanislaus Food had not approved the settlement. He said Stanislaus Food approved the deal Thursday. He said the council vote to settle was 7-0.

“We are pleased to reach this agreement with Stanislaus Food, one of our finest employers, ” Mayor Garrad Marsh said in the news release. “This now allows us to focus our attention on moving forward with updating our studies and operations for all our customers.”